Linkedin Goes Public

by MRamos on 09/06/11 at 4:13 pm

LINKEDIN DEBUTS PUBLIC SHARES AND BUBBLE 2.0 WORRIES

As the first of the big social networking sites to go
public, LinkedIn saw great success in its market debut. Since filing to go
public in January, hype has been snowballing around LinkedIn, and the result
pushed the company to a valuation of $8.9 billion at the closing of its first
day. Priced at $45 before entering the market Thursday morning, stocks opened
at $83 and reached over $122 at their highest point. While trades are sure to
taper from day one’s final $94.25 pricing over the next few weeks, the debut is
undeniably notable, being one of the most impressive first day moves in the
last 10 years.

For a company valued at only about $2.5 billion in the secondary
markets, LinkedIn’s IPO showing is certainly appealing to other social
networking sites looking to make the jump into the public arena. With
speculation of Facebook, Groupon, Zynga and more going public in the next year,
LinkedIn’s opening performance may be just the push these sites needed to file.
At the day’s highest point, the company was being valued at 41 times their 2010
revenues. The downsides to these huge numbers are concerns regarding a second
internet bubble.

When a company like LinkedIn goes public, its means they
believe there are growth opportunities in the market place. Companies use share
sales to fund new developments, business expansion, and most importantly to
consumers bigger, better services and features. LinkedIn’s profits are modest
compared to those of social networking giant, Facebook, so when the days of
high priced trades begin to dwindle, the company is really going to have to
have progressed in terms of worth per user and growth of business clients.

As the biggest tech IPO to go public since Google in 2004,
LinkedIn has a lot to live up to, and will certainly set the tone for those
ready to follow. Whether LinkedIn goes on to justify itself as a nearly $9
billion company or not, the buzz surrounding public shares in social networking
companies shows that Wall Street is finally ready to believe that social media
is here to stay.